ABA Banking Journal - November 2007 - (Page 64)

SPECIAL ADVERTISING SECTION ABA Banking Journal’s White Paper for November 2007: ID Fraud Solutions EXECUTIVE SUMMARY For the full article go to http://www.ababj.com/wpaper07.html Transaction Fraud Protection: A Proactive Deterrent and Detection Approach By: Gregg Bennett Director of Fraud Solutions, JMFA W ith every new payment mechanism introduced to the industry, the vulnerability of banking institutions to transaction fraud and loss increases. A “catch-22” situation exists: unless you implement these new mechanisms, you won’t be able to compete in the electronic banking domain. The solution lies in the use of a fraud prevention system. You Can Impact Transaction Fraud: Most operational fraud loss can be traced to certain points of origin or specific types of payments. Accordingly, any good fraud prevention system will target these areas for heightened security evaluations and procedures: • counterfeit checks; • check washing; • check kiting; • unauthorized drafts; • forgeries; • multiple submissions; and • unauthorized ACH activity. Your duty is to analyze incoming activity and provide a reliable system for uncovering fraudulent transactions on the day they’re presented for payment. Fraud Protection System Basics Your detection system should provide a fraud and loss solution that permits you to meet your customers’ needs, while allowing you to: • decrease transaction vulnerabilities, allowing payment initiatives such as Check 21 to identify risks; • detect fraudulent electronic transactions not addressed by traditional check-centric fraud protection solutions; • reduce overhead costs associated with internal fraud management and previous unreturnable loss items; • more easily meet certain requirements of the Bank Secrecy Act (BSA); and • find these irregularities and resolve them before they result in a problem for your customers. What you want to end up with is a fully integrated product solution that emphasizes intelligent transaction evaluation on the day of item presentment. 64 NOVEMBER 2007/ABA BANKING JOURNAL Fraud Protection System Upgrades New payment mechanisms are always emerging, and that means new fraud risks will invariably arise to threaten your customer’s account security. The system you adopt should address: ACH Transactions: These include paper-less transactions used to replace checks, as well as other risky electronic executions. With ACH protection you have a better, safer way to move the images and automatically block the access of both known and newly detected transaction thieves. PaperPIN Security System: This involves the addition of pin numbers to checks over a set dollar amount, along with information about the payee. This protection system will help to eliminate counterfeit checks and paper washing. Proactive Monitoring: This is a system of account review that does not assume any payment is valid or authorized, and only authorizes a payment after it has validated its qualifications against multiple security parameters and authentications. Payment Review: This changes traditional payment review and final approval from being done as the exception, to a system that requires payment review as a preprocessing authentication step. Remote Deposit Capture (RDC): This service would allow pre-qualified customers to make deposits to their accounts by using bank provided equipment to scan deposits from their businesses. In its 2007 Competitiveness Survey, the ABA Banking Journal reported 16.3 percent of banks surveyed offered RDC, while another 42 percent indicated their intention to offer it during 2007-2008. Conclusion To stay competitive, you need a fraud detection solution that evaluates traditional paper as well as state-of-the-art electronic activity, and blows the whistle on suspicious transactions. This will allow you to protect your customers if the security of their account information is breached. A good system will also enable you to electronically manage compliance regarding BSA/AML regulations. Additionally, it will reduce your losses due to items that you were previously unable to review and return within the narrow 24-hour window of opportunity, resulting in a brighter financial future for your banking institution. http://www.ababj.com/wpaper07.html http://www.jmfa.com

Table of Contents Feed for the Digital Edition of ABA Banking Journal - November 2007

ABA Banking Journal - November 2007 Contents Editor’s Column Briefing: Good News for Mortgages Sleight of Mind N.Y. Hiring Bonanza May Be Bane Snapshot: A Look at Held-For-Investment Loan Growth ABA Resources ABA Chairman’s Position “The Moose Bank” Thrives on Manufactured Housing Loans Finding the Middle Way for Your Bank’s Retirement Program Pass the Aspirin Cover Story: Self-Service Steps Up DIY U.K. Style Marketing to Millennials Getting Real With “Gen Wired” Ethnic Marketing: Disinterested Banking Getting Good at Global Sourcing Case in Point Turn Compliance on It's Head Banker’s Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - November 2007

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